Saturday, May 14, 2011

Comfortably Numb

Yeah, Pink Floyd is nice and all, but I prefer Kirlian Camera's cover. Elena Fossi's not only better looking than Roger Waters, she's also even more of a diva. And Angelo Bergamini is even more inscrutable and unapproachable. And really, Pink Floyd have kinda sucked since 1983's The Final Cut. That's a LONG time to suck.




If the use of electronic devices frightens you, try this instead:



Best version of BWV 1065 mvt 1 I could find. though again, it seems it's the Italians who do it best. The Pinnock version kinda sucks.

BTW, here's a 15-year-old girl who can out-guitar Gilmour and make it look easy:

How I impress the retail dummies on message boards

Back on the subject of RIO, here's how I impress the retail bozos on message boards with my own highly complexified but still back-of-a-napkin method of doing a valuation calc.

In this case, I'm taking the Coffey Report p.146, which seems to be where they're calculating cash flow for La Arena. But I'm making the following changes to their numbers:

  1. No sulphide. Otto reports that RIO apparently doesn't care about it beyond the feasibility stage.
  2. IKN's interpretation of (Alex Black's interpretation of) the recent reverse-circ drill holes at La Arena is that the reverse-circ program proved La Arena has a higher grade than the block model suggests. I'm going to pull a number out of my ass, 30%, and say the post-leach production will be better by that ass-percentage.
  3. Let's say we use constant gold=$1500 instead of Coffey's... whatever? $1000? Looks like it. Gold is in the $1500 range now, and assuming over the next year it goes up rather than down, I hereby assert that RIO's NAV (and therefore share price) should also tend up til it assumes $1500. (If you disagree, get out of gold stocks now.)
  4. Since they also have resources that could be added to reserves, and since now they're also supposedly tripping over the shit on site, I add about 400koz Au to production starting in 2017, 110koz/y.
  5. I jacked up taxes to 3x from 2011-2014, and a constant $40M/y from 2015-2020; then I fudged up a few other things besides, like cash out.
  6. I applied an 8% discount factor compounding per year to the net cash flow in order to sum a NAV. At least I know how to do this part, I work in engineering.
I don't know if I managed to properly extract all costs (and tax benefits or deferments?) associated with the sulphide to make this an oxide-only calc. Such esoterica isn't needed to impress the wieners on the bulletin boards though, because most of them seriously honestly don't even have a clue why you're supposed to discount future production.

Anyway. At 8% discount factor, all this adds up to $590M. With no dilution to fire up the sulphide operation, we divide that by 170M shares, which gives us a NAVPS(8%) of $3.49. More or less, plus/minus 10-20%, science ain't an exact science, and so on.

Now, banker types at PDAC asserted to a serious crowd this year that they actually are happy to apply a much lower discount factor to a mine once it's in operation, even if it's located somewhere worse than Nevada. So, fine... re-run the calc at 5%, and NAV=$650M. Divide by shares out, and that's $3.97.

Now before either of those prices get hit, I guess RIO would have to
  • prove the grade is higher than Coffey assumed, with a few Q of production; and
  • either prove up some more resources, or convert some of what's there now to reserves.
Still, since this number is in the range of my previous $3.51 "ounces in the ground" calc (which included the sulphide), and also in the range of Otto's target, it does offer me yet one more reason to accept that general price target area. In fact, since this target doesn't include any sulphide, maybe the NAVPS(8%) should be more like $4, giving RIO a 50-cent bonus for the sulphide that they don't need/want to mine?

Now, back to the message boards. If it were a tiny illiquid stock, something with no interest outside of retail, I could then post this to a message board on Stockhouse, get hailed as a fecking genius and earn dozens of new followers, and see a nice price pop to boot. I won't do it though, as there's no point when it's a 1M/day volume stock that's cross-listed in Lima.

But don't put it past me with smaller stocks in future, as I am thoroughly happy with committing evil acts to get rich.

Friday, May 13, 2011

Poetry lesson

I wonder if this is any less funny if you don't understand English?

Spanish lesson

I wonder if this is less funny when you actually understand Spanish?

SWD and Macquarie

Macquarie Capital was dumping SWD all day today. While Macquarie Private Wealth has been buying.

I picked up some insanely stupid number of shares for myself. I assume there's Ribbytitty news coming soon? Or maybe Macquarie clients are as stupid and ignorant as us common retail scum.

Thursday, May 12, 2011

short comment

Silver got clobbered today. But I'm taking on faith Turd Ferguson's little call that the bottom is in, so I grabbed some FVI back at $4.90. Considering I sold it a few days ago for something like $5.20, I'm happy.

I also grabbed some SWD at $1.30 on a higher low (or at least I hope so), or rather it was dumped in my lap. Supposed to be some news coming out, isn't there? I should really read up on these silly little stock thingies.

That little cushion from Rio Alto is really helping me with my confidence. Haven't sold any yet. Probably should. Looks like today was a happy news day in Peru, and that's probably the only reason RIO's up.

Re taking a blogger's bottom call - naw, actually, copper also looked better, and gold really failed entirely to react to the drop in silver. Plus the S&P held 1340 yesterday and is stronger today. I'm only in it from minute to minute, dudes. Penny flipping rules!

Wednesday, May 11, 2011

tomorrow

Posting will occur not at all tomorrow as I'm in someone's car, then at a dumb meeting, then being fed, then in a car again. I need to buy a smartphone... but as Apple and Android both keep your history forever and I fear the coming fascism, I have to wait til Crackberry puts out a 4G or until I find a decent Linux phone. With flip-out keyboard and large screen.

So let me be obnoxious again, this time with Katie-Jane Garside and Crispin Grey 20 years later with a new band name.



Katie-Jane was sent here by God (or Satan) because no amount of alcohol and quaaludes can create a voice like that.

RIO versus EPU


OK, so what does this tell you?

1. Gold pour my ass. RIO's simply tracking the Peru exchange.
2. Then again, maybe this means it goes back to $2.40 the minute Ollanta Humala's out of the picture?
3. Of course we're assuming the market has a reason to react favourably to Keiko winning.

Just a market rookie thinking out loud.

BTW... how crazy would you have to be to have bought EPU in late April? How about +15% to the good's worth of crazy? No. I didn't. But it's a large-volume ($20M/day) Peru-tracking ETF.

Hey rogue Peruvian blogger! Wanna add that to your picks list? Or isn't it illiquid enough for you? :-)

How (we) retail dummies do valuation calcs on message boards

Let's see what happens when I try to calc a price target for RIO the way dummies on stock message boards do it - by calculating based on resource and reserve numbers.

Most of my figures come from this page, just because I'm lazy like most message board denizens. Prices there were dated Jan 2010. Other numbers from the Coffey report on SEDAR.

RIO's oxide deposit has 821koz Au reserves @ 0.44g/t supposing $950 Au, and 1.05Moz Au resources supposing 0.4g/t @ $1050 Au. The sulphide has 1.7Moz Au reserves @0.3g/t and 3.1Moz I&I resources. Ignore other metals fer now. Ignore recovery, metal-orgy, and everything else under the sun.

Using $200/oz for reserves (half the value of the average major's reserves' value, or the top end of the range for companies operating in a shithole like South Africa where there's a constant scuttlebutt about nationalization) and $90 for resources (as previously),

Oxide value = 821koz*$200/oz + 1.05Moz*$90/oz = $164.2M + $94.5M = $258.7M
Sulphide value = 1.7Moz*$200/oz + 3.1Moz*$90/oz = $340M + $279M = $619M

Total = $878M

Someone on the message board who read the Coffey report would point out that RIO needs to raise $200M for capex in 2013, so assume you need to divide the total value by 250M shares.

Value per share = $3.51.

Hey! Otto! It works! I just put you out of a job! :-)

Anyway. Problem with this, I know, is that the sulphide is far off in the future, so should be discounted. Then again, the "reserves and resources typical values" bit is generated from companies that also have gold waiting far off in the future, with even more capex in the way than RIO, so... meh. Fact remains, the dumass way of calculating a price target works just as well.

real estate?

US real estate, measured in gold, has fallen to a low, courtesy Buttonwood.

Goldbugs, discuss. I.e., is now the time to sell gold and buy housing?

As if!

Ritholtz calls a top

I trust Ritholtz more than most other bloggers, because he actually has to earn a living trading.

Anyway, today he's warning of a top. He feels the shakeout in commodities is the first step, and we'll see a full (i.e. >10%) broad market correction.

I beat GT to this one



Back in mid-April, while GT was talking about a bullish flag pattern, I thought this chart looked like it was about to repeat the disaster that was January. Divergence between $HUI and $SILVER. The divergence that crazy silverbullishness made everyone ignore. "Oh, it's different this time!"



So now, check out the yellow circles. Since yesterday I thought we might continue to repeat ourselves here.

This is the reason I do dumb stuff like dump GUY, FVI and KGN yesterday. It's not dumb, because there's probably little reason to hold such stocks for another week or two.



Or at least that's what I think.



So now I have to keep reminding myself of this. I don't want to buy FVI at $4.98 today, because I might be able to get it at $4.60 soon. Or at least that's what I suspect.

market comment

Silver keeps dropping.

Here's some interesting price points for me: FVI at $4.80 or $4.65. USA at $0.53. MAI at $2.45. Wondering which of those I shoul pick up.

AR and KGN continue to look relatively strong. Good for you mister techie analyst!

10AM market comment

Wow, good pick for me. Silver collapsed this morning. I'm looking to buy back FVI a lot lower now, like $5. Copper's given back 6 months worth of gains, that can't be good.

I guess we have to watch S&P 1340, that's the m/t trendline I'm seeing.

$HUI looks like it'll retest the SMA(200). Fail on the S&P maybe means the HUI sneaks below the 200? If so, maybe we can see some fear.

RIO had a strong selloff this AM but is holding $2.

GUY still advances, too bad I sold for a 1-day profit. Lesson continually never learned. Oh well, I wanted the cash, and would rather hold FVI at $4.80 than GUY right now.

Tuesday, May 10, 2011

In police-state news....

The reason I read Karl Denninger is because he's one of the few people rabid enough to really freak out over stories like this.



By the way, the "body scanners" are a multi-billion dollar bugaboo that accomplish nothing but enriching the manufacturers - who happen to have struck it rich by hiring former politicians and staffers as lobbyists.

If I ever have to go through this (and I assume under the "one border" doctrine, these probably exist in Canada now too), I'll take a slightly different tack to this guy - I'll drop me troos and demand that the government-appointed molestor touch my junk! In fact, I'll grab his/her hand and force him to caress my junk. After all, it's not sexual assault, is it?

Breaking News: Rogue Peruvian bugger... er... blogger... suppresses price of ECU

Written by someone who uses the word "fiat", but not in reference to the ugly stepbrother of the Lada:

"One of the largest shareholders [of ECU] has been meticulously and laboriously keeping track and recording the market-making activity in this stock for about 4 years, at least [wow! dedication!]. Everyone of us with decades of trading experience have evaluated this data and it is unequivocally illegal manipulation [wow! really?], likely in conjunction with a rogue blogger who operates out of Peru [ha! I thought he was teh evil!]. I even believe Citadel Capital, the Chicago-based hedge fund [run by Lizard People and the Rothschilds? who knows?] may be the lead perpetrator."

Why Citadel?

I want to be an obnoxious blogger

I'd like to try to be a more obnoxious blogger, so here's an embedded Youtube video.



Always remember to Love Your Money!

silver versus HUI

HUI's down a bit from yesterday. Meanwhile, silver's up strongly. FVI's diverging negatively against HUI. I'm saying that doesn't look good.

Oh BTW, I put a sell order in for KGN and went out to dig a spot in the garden for some onions. By the time I came back, someone had already hit my ask. So, oh well... I get enough money for a couple cartons of smokes in return for holding 1300 shares of KGN for a day. I don't mind because frankly I don't know enough about KGN to have any reason to hold it in the first place.

As I just told someone over at Stockhouse, "due diligence is over-rated." After all, I got assraped on YEL and VEM even with loads of DD.

Guyana Goldfields

Well, the volume's not in the millions, but GUY still is accelerating upwards very nicely. Too bad I only bought a half-measure of it. Oh well, a stock showing a 4% profit after a couple days counts as cash in my book.

Turd Ferguson's prediction for today

Turd Ferguson says he expects silver buying to dry up at $39-$40, followed by a drop to $36 next week.

Let's see what happens. Volume in ZSL is mild today, not really scary yet. If silver gets weak, maybe I'll dump some shares and build up a bit of cash? $HUI certainly doesn't look strong right now.

this morning

Silver's looking calm, but just popped upwards. USD opened higher, but within yesterday's range. For some reason the indexes look strongish. Copper's down. Oil's down. $HUI was painting a candle down, within yesterday's range, til silver started advancing at 10AM.

Guyana Goldfields is moving upwards! Last few times it advanced up from $8 it only took a few days to add $1. Doesn't look like it'll do that any time soon. Meh, it's a very easy stock to hold as long as it never loses that $8 floor. I only have a few lots anyway.

BTW... Hey Otto, who was your "An Industry Professional" who said positive things about Greyhound? You call him "highly trustworthy", "somebody with an opinion this author takes very seriously", "somebody that deserves an enormous amount of respect", and "not somebody prone to hype". Plus I'd think he must know geology (i.e. not just Excel) to have any interest in Greyhound at this point. To me, "AIP" sounds like that guy who's always pumping Lydian on BNN.

I mean, aside from him and Mickey Fulp, I can't think of anyone else you "respect" and "take seriously". :-)

Actually, judging by the bunch speaking at this year's PDAC, there probably is nobody else worth respecting or treating seriously.

Monday, May 9, 2011

Keegan resources - buy or no?

KGN spent 4 days plummeting on high volume, bouncing hard off $7.50. Maybe I haven't paid enough attention to it yet, but it looks like its last financing was at $7.50... interesting.

Now the volume's dried up nicely and it's begun dithering at $7.80 or so.

I bought a tiny bit, but my own tolerance is $7.55 or so, its lower support line. Alternatively, a declining price on >200K daily volume.

Upside? Can O' Corn has $14.25, but that's based on $1600/$47.50. Well, at least they revised their PM outlook back on April 21st. Poor dumb CIBC revised theirs on May 2nd. Um, y'know, the day of the PM collapse. Wonder if they ever issued a retraction?

Anyway, I'll just hold for a bit and see what the action is. Need to do some reading on Keegan first. I find it fun to get in on a stock the day before GT, and he said he was considering KGN. Too bad it's not a nice illiquid Otto stock, where if you get in the day before his reccy you can flip to his bidhitters for a 10% 1-day gain. BTW, EST's back at 0.90, eh? :-)

MAI strike over?

Okay then. The strike's over already. I want to follow the price til the government-ordered conciliation process is over.

UPDATE 1-Minera Andes says work resumes at San Jose mine, shrs up 04 May 2011 10:22 ET

May 4 (Reuters) - Canadian miner Minera Andes said on Wednesday it was restarting production at its San Jose mine in Argentina, about two weeks after workers walked out over pay issues.

The company's shares rose 9 percent to C$2.68 in morning trading on the Toronto Stock Exchange.

On Tuesday, a union leader said the striking workers at the silver-gold mine would go back to work after the government ordered compulsory conciliation. [ID:N03137136]

The San Jose project, which is operated by Minera Santa Cruz SA, which is 51 percent owned by Hochschild Mining plc and 49 percent by Minera Andes, had been shut since April 21. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Maju Samuel)

3:30PM market comment

Not really able to sell anything at the prices I want. Problem is, I'm holding on to too many things in anticipation of good news. Dumped a bit of FVI at a slight profit to get a little bit of spare cash, but still have twice as much left. Dunno what the possible return is from FVI at this point, but I'm sure I can always get back in at this price at some point in the future.

Frankly the cash has more value to me right now.

Feeling better about things this afternoon. Silver remained strong (probably silly strong - I can't see this lasting), and $HUI has gone back to painting a nice white candle. $USD has started declining again, mildly, and maybe that's what's giving commodities a bit of a boost?

Anyway. Thought RIO would get more of a kick from the first pour news. No big deal, happy to own it again. Made lots of money daytrading it back in November.

Went and poked fun at GNH some more today. Just look at that chart! The only big trades are dumps right into the bid! GNH moved up from .16 last year once the Agoracom people started piling into it. I had a feeling that, once the Agoracom people had all finished dumping, it'd be right back to 16 this year. Guess what? We're almost there.

I guess that counts as some sort of proof of supply-demand equilibrium? The underlying assumption is that a whole year of drilling didn't manage to prove that GNH had any more gold than anyone thought they had a year ago. I'm pretty sure their drill results back up that assumption.

10:30AM market comment

Silver opened strong. With that in mind, copper oil and the S&P look like they're weakening. I don't expect silver to stay 5% up today. The HUI is painting a second inverted hammer after its customary Monday AM Newsletter Spike, so it looks like it can't make up its mind whether or not to hold its SMA(200).

I'm all in, but want to raise cash. Thankfully I have a lot of stocks that have possibilities for near-term price improvements: RIO should go up, and MAI just needs the strike to end to gain some strength.

Two others, I'm underwater and don't want to dump. AUU looks like puke right now but awaits results from Taviche and an announcement of drilling beginning at Greyhound, so I don't want to dump that. BHV is a dismal waste of time and probably won't regain the 70s despite today's drill results. I wish Dundee could start pumping the stock, since it was apparently them that tanked the price to begin with. Fix your own sabotage, guys.

So I dumped some FVI for a mild profit, thinking I can get back in below $5 again. Sad when you can pennyflip a good miner like Fortuna.

Anyway. Still very little cash available. But most of the money I have is in stocks I in no way want to dump., and the rest is in underwater positions I don't want to abandon just yet.

I'm still trying to repair the portfolio damage I did earlier this year.

Sunday, May 8, 2011

The exasperating Biiwii

First, some general ground rules. I know it's very uncouth to give away a market newsletter's content for free. I don't want to do that.

However, the only reason I have this blog is so that I can keep my own market thoughts in order. It's not here for you or anyone else. I'm happy to keep it a public blog so that people can leave comments - in fact I'd like to have comments, from a few select people who already know who they are - but I'll shut the darn thing down, or make it a me-only blog, if there are too many people reading.

So I'll probably be posting things that, if you were clever enough, would allow you to infer that some particular paid newsletter is touting some particular narrative, imminent market event, or stock. But I certainly won't be posting anything as complex as someone's detailed market analysis. And since almost nobody should be reading this anyway, hopefully the damage is zero.

Anyway, I'm a subscriber to Notes from the Rabbit Hole, GT's newsletter. I always find it a difficult read, and it seems to mislead me more than not. But I still want to continue subscribing, because at some point I'll figure out precisely how to read it properly.

I come from a Humanities background, where one learns to not begin writing til he's got a thesis; to put the thesis in the beginning; to present all confirming (and disconfirming too, as it shows the prof how clever you are and helps pad shit out to 30 pages) evidence in the main body; and then at the conclusion, to ask all the clever questions that your evidence brings up.

(Seriously: my best essay marks ever came when I learned to end an essay with a question. Prof realizes at that point that you're smart enough to know how to keep the research grants coming.)

Anyway. GT does absolutely none of this. It makes his newsletter an exasperating read.

Still. In his grand narrative (and this is presented on his blog so no giveaways here), $TYX has to constantly turn back from its monthly EMA(100) or else we've entered a grand new inflationary paradigm. Guess what? It's turned down.

That's supposed to be a deflationary warning.

So we need to watch out for some danger signs, this week: does $HUI lose the SMA(200)? Does $COPPER fail present support at 380-400? Does $RUT lose 825-835? Less imminently, $GYX, $WTIC and $CCI are in danger of failing support sometime soon. I assume (don't expect me to know what he's saying) that some or any of those mean it'll be a bad time to own gold stocks; and even the PMs themselves, at least compared to going all-cash.

In any case, after listening to Grandich (ha ha, there we go again) I'm less concerned. Grandich wouldn't be as interested in touting re-entry to silver if he was expecting a major deflationary event.

Here's my contrary response to each:

  • The $TYX can churn down just below the monthly EMA(100) for a good long while before moving far down to support, GT's own charts tell me. We may have a few months.
  • The $HUI got buggered by the silver puke (it failed to track silver upwards, but by simple hysteresis it quickly reconnected when silver dropped).If it finds support at SMA(200), I'll have some upside that I want to exploit.
  • $RUT looks bad because the broad markets look bad: but the S&P 500 hasn't yet broken its medium-term upward channel (support is just below), nor has the Q. So far, this just looks like the mid-April pullback all over again to me.
Copper, however, has looked like shit since February. That scares me. Then again, on the long-term chart, JJC's upward channel has not been violated and won't be til JJC drops somewhere below 51. And hey - it puked last year in the spring too. Wonder if there's seasonality to the copper price?

The USD has caught a bid and shot back up, but Turd Ferguson is saying this is only temporary and may reverse. Of course, TF was caught with his pants down all this week: no matter how much he dost protest, he really had no fucking clue what was going on with silver til it finally found a bottom.

I guess that's a hint that TF's analysis is worthless during market discontinuities and paradigm shifts. The guy's a tinfoil-hatter anyway.

Anyway. I may have completely misunderstood everything GT wrote, but it looks like if $HUI and $RUT (and less importantly $WTIC and $CCI) fail, I probably should go on a long summer vacation.

Why I like Peter Grandich

I know Otto's going to be looking at this blog at least once, since he was the one who suggested I start one. So, the timing being fortuitous and the subject matter being dicey, let's make my very first post about why I think it's essential to follow Peter Grandich's blog, so I can drive Otto nuts with my very first post.

Let's get this out of the way right at the start: I find 99% of Grandich's blog to be highly offensive. The posts seem to make him out to be a radical fundie and Birther with John Birch Society/Pat Robertson leanings; Otto also likes to point out that Grandich is a paid tout, so (trusting Otto's read entirely) reading his stock reccies is as much a waste of time as reading his political screeds. And if you write him to complain, or even debate, he (or, more likely, someone who works for him) will just flame you with offensive garbage.

Still, I became a subscriber of his back when all he had was a private mailing list, back before I ever bought anything other than my bank's cruddy mutual funds, back when he was still showing up once in a while on NBR. And honestly, for the 1% of the time that Grandich calls a top or bottom, he's worth a fortune to me. This guy has instincts.

And so, back on April 25, Grandich called a (local?) top in silver. Really, he was a few days off, but it was still a chance for his followers to unload at $46.

Now, as of May 5, he's calling a (local?) bottom in silver and adding SLV to his tracking list. At SLV=$34. (I.e., $SILVER=$35 or so.) He's making assertions in a Korelin interview that:

  • he feels the recent collapse has driven the hot money out of silver, and now silver should go back to a slow and steady rise;
  • despite the correction being so fast he thinks it's done;
  • he's happy that (he feels) the media is back to hating PMs, his best contrary indicator;
  • we're still in a (longer-term?) PM bull market;
  • quite a lot of things (including the margin raises) combined to cause the market drop.

So, Grandich's jumping back in to silver, and adding SLV to his tracking list, together make me feel safer about sticking with the few silver miners I have.